USA March 2016: Ford outsells General Motors in lukewarm market

Thanks to fleet sales, Ford Motor outsells GM for only the third time in 17 years.

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Last month we at BSCB have started warning the U.S. new vehicle market is showing signs of overheating, with incentives, bad credit-induced leasing and “punching” (self-registrations by dealers) at an all-time high. March figures confirm this: despite two additional selling days, the overall U.S. market is up just 3% year-on-year both in March (1.595.484 registrations) and year-to-date (4.087.766). If this is still the third highest March volume in history below 2000 (1.669.100 units) and 2001 (1.599.600), analysts had forecast a much higher figure at 1.660.000, and it actually corresponds to a 4% decline in daily sales rate. The bad news continue when looking at the seasonally adjusted annual sales rate (SAAR), down to 16.56 million from 17.14 million in March 2015 and 17.53 last month, and compared to forecasts of 17.3 million. The March SAAR marks the end of 10 consecutive months above 17 million.

The RAV4 remains the country’s best-selling SUV, but Toyota is struggling.

This lukewarm result comes as average incentives per vehicle are up 10% on March 2015 to $3.005 according to TrueCar. Low petrol prices continue to favour light trucks (pickups, crossovers and SUVs), up 12% in March to 908.044 units or 56.9% of the market, whereas passenger cars are down a harsh 6% to 687.440. We anticipate a further increase in incentives will enable the U.S. market to post a second consecutive record year in 2016, but just. Jeff Schuster, senior vice president of forecasting at LMC Automotive, agrees: “Auto sales are not yet peaking, and the outlook for the year remains robust, even with some retail softness and noise in March. The year-to-date 3% increase leaves some room for additional volatility and the expected slower growth rates later in the year.” This quote is by Automotive News.

General Motors sales are up just 1% in the midst of a fleet sales scale back.

Ford Motor outsells General Motors for the first time in five years and only the third time since August 1998 when GM was in the midst of a strike, along with February 2010 and March 2011. Ford sales are up 8% to 253.064 vs. +1% and 252.128 for GM. However, Ford’s meagre 936-unit victory is due to fleet shipments: Ford’s are up 39% while GM’s are down 13%. This win comes amidst a conscious reduction of less-profitable fleet sales – notably to short-term rentals – at GM, and a push towards retail sales. GM said it sold 193.524 retail units in March (+6%) with Chevrolet retail sales up 7% and GMC up 13%. On the other hand, GM sales to short-term rentals dropped 36% over the first quarter of 2016, planning for 310-320.000 units in 2016 vs. 400.000 in 2015 and 449.000 in 2014. Ford on its part is arguing that despite much higher fleet sales, the average transaction price for the Ford brand has increased by more than $1,600 per vehicle in March – nearly double the industry average – according to Mark LaNeve, Ford’s vice president for U.S. marketing, sales and service, quoted by Automotive News.

Below Toyota Motor weak at 219.842 sales (-3%), FCA Fiat Chrysler Automobiles posts an incredible 72nd consecutive month of year-on-year gains at +8% to 213.187. This results comes on the back of incentives up 14% on March 2015 to $3.887 per car according to TrueCar, 30% above the market average. FCA continues to surf on the unquenchable thirst of U.S. consumers for light trucks, up 25% while FCA’s passenger cars sink down 34%. Jeep delivers a 30th consecutive increase at +15% to its best March ever (82.337 units) and is now solidly installed in 6th place overall in the brands ranking above Hyundai and Kia. Ram and Dodge are both up 11% whereas car-heavy Chrysler (-13%) and Fiat (-24%) crumble down.

Nissan North America is the best-performing large manufacturer this month with deliveries up 13% to 163.559, easily outselling Honda, itself up 9% to 138.221. The Nissan Division reports a record 149.784 sales (+13%) with both the light trucks (+9%) and passenger cars (+16%) lineups delivering record months. The Altima at #5 (+9%), Sentra (+23%), Versa (+12%) and Maxima (+139%) all frankly outpace the market this month. Nissan incentives are up ‘just’ 6% year-on-year to $3.362 per vehicles, growing slower than the market but still above average. On the negative end, the Volkswagen Group is still handicapped by the aftermath of its emissions scandal with VW brand sales down 10% not compensating for another stellar month at Audi: up 7.5% to a 77th straight month of year-on-year gains. Notice also Mitsubishi up 14%, Volvo up 16% and BMW down 13% despite an average $4.816 incentive per vehicle, the highest in the market.

Subaru signs a 52nd consecutive year-on-year gain with almost no incentives.

A quick look at incentives per manufacturer shows where each places vs. the industry average of $3.005 according to TrueCar estimates. BMW leads he way with $4.816 above Daimler AG ($3.981), General Motors ($3.943), FCA ($3.887), Nissan ($3.362), VW Group ($3.349), Ford ($3.271), Kia ($2.868), Hyundai ($2.163), Toyota ($2.027), Honda ($1.590) and Subaru ($569). Notice Subaru with hardly any incentive, still delivering a 52nd consecutive month-over-month increase at +0.4% and 49.285 sales, the brand’s best March result ever and capping all-time record quarter sales. Among smaller brands, Land Rover (+29%), last swan Scion (+64%), Tesla (+106%) and Jaguar (+28%) all post spectacular improvements.

First appearance of the Cadillac CT6 in the U.S. sales charts this month.

Over in the models ranking, the Ford F-Series (+9%), Chevrolet Silverado (+6%) and Ram Pickup (+8%) all outperform the market to cement their domination in these truck-heavy times for U.S. light vehicle sales The Toyota Camry (-9%) struggles and is threatened this month by the Nissan Altima (+9%) while the Honda Civic (+22%) confirms it is the new small car king above the Toyota Corolla (-8%). The Toyota RAV4 (+15%) remains the most popular SUV in the country, and the month bot the Ford Escape (+8%) and Nissan Rogue (+1%) also unsettle the traditional leader, the Honda CR-V (-3%) down to a paltry 14th place. The Ford Transit (+53%), Edge (+49%), Chevy Colorado (+47%), Malibu (+33%) and GMC Sierra (+24%) deliver the highest year-on-year gains in the Top 50 when removing the Dodge Grand Caravan (+117%) and Chrysler Town & Country (+148%) both in full runout mode before their rationalisation into the single Chrysler Pacifica later this year. Two months after launching in China, the Cadillac CT6 makes its first appearance in the U.S. sales charts at #261 with 35 units sold.